This Week in Poverty: Will the Poor Get Poorer in the Land of Lincoln?

April 27, 2012

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At an Appropriations hearing in the Illinois State House last week, the Department of Human Services (DHS) informed the legislature that it has insufficient funds to meet its Temporary Assistance to Needy Families (TANF) obligations through the fiscal year ending in June.

This is particularly disturbing since Illinois provides TANF benefits—which is cash assistance—to just 13 of every 100 families with children in poverty, according to the Center on Budget and Policy Priorities (CBPP). Prior to welfare reform in 1996 the state helped nearly 87 of every 100 families with children in poverty. Further, the benefit level is only 28 percent of the federal poverty line, or roughly $4,800 annually for a family of three, similar to that in a majority of states.

According to Dan Lesser, director of economic justice at the Shriver Center in Chicago, Illinois will find the funds to pay the TANF benefits one way or another—but just how the state will do it is a significant question.

“The governor has asked the legislature for a $73 million supplemental appropriation to pay for it,” says Lesser. “Historically, supplementals are approved here when they are needed. But nowadays nothing is assured. If it’s not approved, we face a real possibility of crashing the state’s child care system.”

That’s because without the supplemental, Illinois will pay cash assistance by diverting money DHS had intended to use to fund the state’s childcare assistance program.

Under welfare reform, a state can use its federal TANF block grant in a variety of ways, including cash assistance, childcare, education and job training, transportation, aid to children at risk of abuse and neglect, and other services to help low-income families. Since the block grant was set in 1996 and isn’t indexed for inflation, those dollars don’t go nearly as far—in fact, the block grant has lost nearly 30 percent of its value since that time. Also, because it’s locked in at the 1996 funding level, the program has proven unable to respond to greater need during the recession.

Source: Center on Budget and Policy Priorities

This inability to expand during an economic downturn came into play in Illinois, when unprecedented long-term joblessness and an increase in the number of people exhausting their unemployment benefits resulted in a greater need for TANF assistance than the state anticipated.

“Unlike many states, Illinois did not actively discourage families who were eligible for TANF during the recession from receiving it, so caseloads grew,” says Lesser.

Currently, 165,000 low-income children are in the Illinois childcare assistance program, making it possible for their parents to go to work or school. Lesser says if the supplemental appropriation isn’t approved, and funds intended for childcare are therefore diverted to meet TANF cash assistance obligations, payments to childcare providers will perpetually run one month behind schedule.

“Childcare centers aren’t very well capitalized,” says Lesser. “They don’t have access to credit, by and large. And particularly in lower-income neighborhoods this is a major source of income—there aren’t too many ‘private-pay’ children. So we’re definitely looking at missed payrolls, facility closings and thousands of families without access to childcare in the very communities that are the most vulnerable to further economic hits.”

While Democratic Governor Pat Quinn has done the right thing in requesting the supplemental appropriation, his plans for the poor aren’t all good news. Next fiscal year—which begins in July—he proposes raising parent co-payments for child care by an average of 52 percent.

“That raises $36 million all on the backs of low-income people,” says Lesser. “It will drive people out of the system, threaten providers and make it more difficult for low-income people to work.”

The governor also wants to reduce the maximum TANF eligibility from five to three years.

“Shortening time limits retroactively is bad policy in any environment, but it is really bad policy when unemployment is high,” says Dr. LaDonna Pavetti, vice president of the family income support division at the CBPP. “The people most likely to be cut off are the people least likely to find employment.”

It’s clear from the post–welfare reform experience that making it more difficult to access cash assistance results in an increase in deep poverty. In factf, according to the New York Times, roughly 4 million women and children are now jobless and without cash aid. Research also shows that for children in low-income families, a modest “$3,000 annual boost to family income is associated with a 17 percent increase in adult earnings” and “135 additional work hours per year after age 25.” To make that income boost harder to obtain is—at best—shortsighted.

“We need policies that help lift Illinoisans out of poverty, not push them deeper into it,” says Kimberly Drew, a Poverty Commission staffer and a policy associate with Heartland Alliance for Human Needs & Human Rights. “Reducing the lifetime limit for TANF will have a devastating effect on many of our most vulnerable children and families.”

“The situation Illinois is facing is exactly what people feared would happen with a block grant,” says Pavetti. “When you have limited funds that don’t increase with need, helping poor families becomes a zero sum game and some families inevitably lose. With a fixed block grant, the only way you can provide cash assistance to more poor families is to take the money from somewhere else. In the case of Illinois, that happens to be child care. TANF is a broken system that desperately needs to be fixed.”

Finally, another piece of legislation in Illinois that would make a real difference in the lives of low-income people: a proposal to increase the minimum wage from $8.25 to $10.65 per hour over four years, and then index it to inflation. Tipped workers—currently paid only $4.95 per hour—would also be paid the new, full minimum wage. Currently, 100,000 state residents work full time, year-round, and still live below the poverty line, earning about $16,500 per year. The bill is expected to be voted on in committee next week.

This is a critical moment for people living in poverty in Illinois—hard times could get a lot harder in the coming months. If you’re a state resident, contact your representatives—tell them to oppose reducing TANF eligibility to three years; oppose raising child care co-payments; support the supplemental appropriation to pay for TANF benefits; and support raising the minimum wage.

Greenstein: Countering Safety Net Myths with Facts

At a hearing before the House Budget Committee last week, Robert Greenstein, president of the CBPP, testified on the need to strengthen the safety net. While his testimony fell on deaf ears with regard to House Republicans, that doesn’t mean his insights aren’t invaluable to the rest of us.

You can read Greenstein’s entire testimony here, but here’s a summary of some of the main points made by a guy who has been working on budget issues since 1972, and runs an outfit that knows the intricacies of policy and data as much as anyone in this town.

Greenstein cites a statistic that is a good one to remember when you hear the myths “we don’t know what to do about poverty” or “we waged a war on poverty and poverty won”: without the safety net in 2010, the poverty rate would have been 29 percent, nearly double what it is today. The Earned Income Tax Credit and Child Tax Credit alone lifted 9 million people in low-income working families above the poverty line, including 5 million children. Food stamps (SNAP) lifted another 4 million people out of poverty.

House Budget Committee Chairman Paul Ryan would have you believe that the safety net is in danger of becoming a “hammock,” lulling otherwise able-bodied workers to sleep and creating a culture of dependency.

But Greenstein notes that 91 percent of all spending in 2010 on federal entitlement benefits went to people who either are not expected to work because they are 65 or older or disabled, or were members of working households. Another 7 percent went “for unemployment insurance, Social Security survivor benefits for widows and orphans of deceased workers, Social Security benefits for retirees aged 62-64, or medical care.” If you add major non-entitlements—low-income housing assistance, WIC and low-income energy assistance—90 percent of benefits still go to people who are elderly, disabled or in working households.

Greenstein explores the increase in deep poverty—people living below 50 percent of the federal poverty line, or less than roughly $11,000 for a family of four—that resulted from welfare reform in 1996. Single mothers “with less education and skills and more physical, mental health, or other problems,” and children in particular took a hit as they faced deep cuts in benefits and other obstacles to getting assistance. In 1995, cash assistance under the old AFDC program lifted 2.2 million children out of deep poverty. By 2005 the TANF block grant lifted only 650,000 above that level.

One positive aspect of the safety net is SNAP (food stamps), which in 2011 cut nearly in half the number of children living below the World Bank poverty standard—less than $2 per day, per person. Without SNAP, 1.46 million households with 2.8 million children lived below the standard; but when SNAP is taken into account 800,000 households with 1.4 million children lived in these extreme conditions. (Still far more people than this country should stomach.)

“The importance of retaining the SNAP program structure alongside the TANF block grant cannot be overstated,” Greenstein writes. He also reminds that before there were national eligibility and benefit standards for the food stamp program—under President Richard Nixon—we had childhood malnutrition and related diseases in some poor areas “that were akin to those in some third-world countries”; kids with open sores that wouldn’t heal, distended bellies, complete lethargy. The House proposal to block grant SNAP—and Medicaid too—as we have done with TANF, would be tremendously regressive, resulting in the kind of inability to respond to need that we see with TANF.

Finally, Greenstein cites research showing the tremendous “beneficial effects on young children in low-income families” that result from a $3,000 increase in a family’s income, “whether the increase comes from earnings or other sources such as government assistance. These findings underscore the importance of programs such as SNAP, the EITC, and the Child Tax Credit as work supports.”

After reading Greenstein’s testimony—which I recommend reading in its entirety, since it goes into far more detail than I go into here, and it’s a great tutorial on the safety net—the actions taken by House Republicans this week on the budget were all the more striking.

Melissa Boteach, director of Half in Ten, reveals some of the choices the GOP made in an effort to avert military cuts scheduled for January 2013 under a bipartisan agreement reached last summer. These include: at least $33 billion in cuts from the SNAP program (it’s worth noting that nearly half of the program’s 46 million participants are children, and subsidies to corporate agriculture were left untouched); the elimination of the Social Services Block Grant, which helps over 11 million kids through funding for child abuse prevention and intervention, foster care and child protective services; and eliminating the Child Tax Credit for parents who pay federal income taxes using an Individual Taxpayer Identification Number instead of a Social Security number. That mainly hurts American children whose parents are low-income working immigrants.

“The $1,800 the families will lose, on average, could otherwise go toward decent nutrition and stable housing—all associated with better development and school performance,” says Deborah Weinstein, executive director of the Coalition on Human Needs.

“That’s $1,800 less per year for the families of 5.5 million children—working families with incomes below the poverty level,” adds Boteach. “This at a moment when more than 1 in 5 kids are living in poverty.”

E-mails from Readers

Dear Greg,

Over the almost sixty years I have been on this earth, I have straddled social movements and seen change come about. It began with racism, moved on to include sexism, then to discrimination of disabilities and then to gay rights, not necessarily in that order. Poverty is on the horizon awaiting the chance to be the next movement. Poverty is ready to raise its voice and some of us who are living in it are prepared to speak.

You will see something quite remarkable happening with the This Week in Poverty discussion on poverty—something that seldom happens with the major media: actual poor people are being given a voice too. Readers might consider that while we poor aren’t polished academics, we are indeed experts in poverty because we live it every day. We have some know-how and may also have some ideas that could make life better for every class if we work together.

All we ask is that you respectfully listen, not “troll.” Webster’s defines trolling as posting“deliberately inflammatory articles on an internet discussion board.” Is simply disagreeing with someone “deliberately posting something inflammatory”? No. But we all know the difference between disagreeing and being inflammatory, and we should pay attention to that line.

As one of America’s ‘long term unemployed’ and a single ‘Adult without Dependent Children’ (AwDC), I have been stunned and saddened by the lack of resources and/or compassion for people that fall into this category, and have been writing about this for quite some time. My most recent post was published just yesterday:

“Millions of the long term unemployed are classified as ‘Adults without Dependent Children’—which simply means that they do not qualify for any assistance other than food stamps once their unemployment benefits are exhausted….

“Along with skyrocketing gas prices, food prices have also soared, leaving many with the absolute inability to feed, clothe and house themselves and/or their families without some level of assistance. The plight for those ‘AwDCs’ continues to be grim, and will only get worse if the SNAP program is cut even further while, at the same time, millions remain without meaningful work they can rely on to sustain their own existence financially.”

This is a horrifying and unbelievably humiliating situation to be in. I never in my life thought I’d find myself in circumstances such as this. I continue to be amazed at the indifference of so many in our society—as well as lawmakers at all levels—regarding the plight of so many AwDCs who now find themselves among the ranks of the homeless and very poor as a result of long term (and potentially permanent) unemployment.

Submitted by “Bobbolink,” a homeless person who reads this blog regularly:

“In the research of Fisk and her colleagues, people were asked how different social groups are viewed by their society. When asked a series of questions about social warmth and the competency of different social and ethnic groups, the answers clustered around four emotional responses: pity, envy, pride, and disgust. For example, people routinely react to the homeless with disgust. This is puzzling enough. You might have thought people would pity the homeless, empathize with their position, and feel sorry for them. Not at all. And in a functional MRI study, when study participants were presented with pictures of members from each social and ethnic group, the medial prefrontal cortex—the site that registers the potential for an object’s social action—popped for all but one group: the homeless. The homeless maybe seen as human, but not fully so, not as social actors.”
—from The Empathy Gap by J.D. Trout

This Week in Poverty posts every Friday morning. Please comment below. You can also e-mail me at WeekInPoverty@me.comand follow me on Twitter.

Greg KaufmannTwitterGreg Kaufmann is a Contributing Writer for The Nation and a Fellow at the Family-Centered Social Policy program at New America.